RELEASE: CAP Analysis Shows Executive Action on Immigration Will Boost Tax Revenue; Quantifies Payroll Tax Gains as Workers Come Out of Shadows
Washington, D.C. – A new report released today by the Center for American Progress finds that a deferred action program that allows undocumented immigrants who have lived in the United States for at least five years to apply for a temporary work permit would increase payroll tax revenues by $6.08 billion in the first year alone and increase revenues by $44.96 billion over five years.
The report, “Administrative Action on Immigration Reform: The Fiscal Benefits of Temporary Work Permits,” analyzes one of the administrative actions President Barack Obama could announce in the coming months: Expanding the ability to request deferred action to undocumented immigrants who are deemed to be low enforcement priorities.
The analysis shows that the United States stands to gain a significant amount of new revenue from a deferred action program with work permits. Most striking is that the payroll tax revenue gains would be realized immediately—within the first year—and only grow over time as more immigrants apply for relief under the program and receive work permits.
“A deferred action program would significantly increase tax revenues and the reason why is straightforward,” said Patrick Oakford, author of the report, and immigration and economic Policy Analyst for the Center for American Progress. “First, it would create a legal avenue for undocumented workers and their employers to begin paying payroll taxes. Second, temporary work permits would provide undocumented immigrants greater labor market mobility and strengthen their workplace protections, both of which lead to higher earnings and in turn increase payroll tax contributions.”
The analysis estimates the fiscal impact of deferred action for three different groups: undocumented immigrants who have lived in the United States for at least 5 years, 10 years, and those who have a minor child living in the United States. These are some of the report’s findings:
- Temporary work permits would increase the earnings of undocumented immigrants by about 8.5 percent as they are able to work legally and find jobs that match their skills.
- A deferred action program that allows undocumented immigrants who have lived in the United States for at least five years to apply for a temporary work permit would increase payroll tax revenues by $6.08 billion in the first year alone and increase revenues by $44.96 billion over five years.
- If President Obama instead extends deferred action to a smaller number of undocumented immigrants, then the payroll tax revenue gains would not be as high.
“Our immigration system is hopelessly broken,” said Angela Kelley, Vice President for Immigration Policy at the Center for American Progress. “There is no doubt that Congress holds the key to a permanent solution, but they have made the choice to lock out any solutions and stick with the status quo. Action by the president is a smart first step, and importantly, it’s a winner for our economy at a time we can’t afford to leave any dollars on the table.”
Read the full report here.
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